Ten states where gas prices bite hardest

DouglasMcIntyre and Charles Stockdale

NEW YORK (24/7 Wall St.) — The price of gasoline has risen to $3.815, according to the American Automobile Association. Four-dollar gas, as a national average, may only be a month away if crude oil stays above $105 and the Libyan conflict continues.

There are also fears that the international oil crisis could worsen if political conflicts in Nigeria boil over into crude-production operations, which have been shuttered in the past by guerrillas.

Gas prices fluctuate sharply from state to state. Regular unleaded fuel costs $4.17 per gallon in Alabama, while the price is below $3.50 in some other states. Part of the reason for these discrepancies is differing gas taxes, and another part has to do with the cost of transporting fuel.

Gas prices in and of themselves do not affect consumer spending. Fuel costs cannot be considered in a vacuum. A household with an annual income of $250,000 may not be bothered much by $5 gas. A household with an annual income of $35,000 could find that $3.50 gas is so expensive that cutbacks on other daily expenses are necessary to offset the cost of driving.

24/7 Wall St. looked at factors that make gas more or less affordable by state, examining the average price of gas, of course, while also considering other factors that make fuel affordable. These included a state’s median household income, unemployment levels and the proportion of people who live below the poverty line. A state with high gas prices, high unemployment and low median income is likely to be one where consumer-spending levels are threatened.

This analysis shows the extent to which the U.S. economy cannot be viewed as a whole — an undifferentiated collection of 50 states. Some states on this list, like Alabama or West Virginia, could be tipped back into a local recession because of a combination of high gas prices and low wages.

Each of the states whose people can least afford gas has a different set of factors contributing to the effects of high fuel costs. However, most of what is said about Indiana could also be said about Kentucky. Gas prices cause people to postpone vacations and defer daily expenses. Construction companies will suspend some of their activities. Businesses that deliver goods to homes or other businesses will try to raise their prices to offset their costs of transportation.

Some of the states on this list barely made it out of the recession, if they did at all. Some still have double-digit unemployment and high poverty levels. The sharp rise in gas prices becomes more severe each day.

10. Iowa

Median income: $50,721 (21st highest)

Price of regular gasoline: $3.94 (8th highest)

Unemployment: 6.1% (6th lowest)

Below poverty line: 13.07% (16th lowest)

High gas prices are causing pain across Iowa, which has the eighth-highest gas prices in the country. One sector having trouble dealing with these rising prices is Iowa’s school districts. Gov. Terry Branstad announced projections of 0% spending growth for all Iowa schools for the next two years, yet the schools cannot avoid spending more money for fuel. “We’re at the mercy of the market whenever we purchase,” said Bill Good, chief operations officer of the Des Moines School District, according to Des Moines broadcaster KCCI, meaning cuts must come from elsewhere.

9. Ohio

Median income: $45,879 (19th lowest)

Price of regular gasoline: $3.83 (17th lowest)

Unemployment: 9.2% (20th highest)

Below poverty line: 19% (16th highest)

Gas prices in Ohio are not only affecting drivers but industries in the state that rely heavily on transportation and related services. One local news station noted that farmers, too, are taking a hit. This is due to the unavoidable use of farming equipment, as well as the rising costs of supplies such as fertilizer.

8. North Dakota

Median income: $50,075 (23rd highest)

Price of regular gasoline: $3.97 (7th highest)

Unemployment: 3.7% (lowest)

Below poverty line: 12.77% (15th lowest)

North Dakota has the seventh-highest average gas prices in the country, at $3.97 a gallon — up 12.8 cents from March. As quoted by Bismarck television station KFYR, the director of the North Dakota Tourism Division, Sara Otte Coleman, said “an increase in gas prices is [going to] hurt people’s discretionary income in general.” The state’s tourism industry may suffer as a result.

7. Florida

Median income: $45,631 (15th lowest)

Price of regular gasoline: $3.82 (18th lowest)

Unemployment: 11.5% (2nd highest)

Below poverty line: 18.17% (18th highest)

The state has the third-highest unemployment rate in the country — 11.5% — and, in combination with high gas prices and relatively low median income, is a recipe for pain among automobile users. The state’s average gas price is $3.82, which is the 18th-highest in the country, and its median income is $45,631, the 15th-lowest amount. Those who are looking for work or who have low incomes are being hurt the most by gas prices. Others have turned to hybrid cars as a solution. A southwest Florida news station noted that hybrid cars have begun selling so quickly that there have been unexpected shortages in the state.

6. Kentucky

Median income: $42,664 (8th lowest)

Price of regular gasoline: $3.80 (21st lowest)

Unemployment: 10.4% (6th highest)

Below poverty line: 22.67% (3rd highest)

Kentucky is home to the ninth-lowest median income in the country, the sixth-highest unemployment rate, and the third-highest percentage of populace living below the poverty line. The national average for the increase in gas prices from last year is 28%. Gas prices in Kentucky, during that span, have increased 34%. Gas prices have also caused food prices to increase by 5.2% in the past three months, the highest quarterly increase in the past three years, according to the Kentucky Farm Bureau.

5. Michigan

Median income: $45,994 (20th lowest)

Price of regular gasoline: $3.94 (9th highest)

Unemployment: 10.4% (6th highest)

Below poverty line: 19.07% (15th highest)

Gas prices in Michigan are the ninth-highest in the country, which may exacerbate the state’s unemployment rate — already the country’s sixth-highest. One industry being affected is construction, which is struggling with the rising costs of material. Mike Ferraro, the president of Ferraro Builders Inc., was recently quoted by a northern Michigan TV station as saying, “We have to pass that along to some extent, and the difficulty is determining how much of this increase expenses we can pas so to the consumer versus how much we’re able to essentially absorb.”

4. North Carolina

Median income: $41,906 (8th lowest)

Price of regular gasoline: $3.89 (11th highest)

Unemployment: 9.7% (12th highest)

Below poverty line: 20% (13th highest)

North Carolina has the 11th-highest average gas price in the country. It also has the eighth-lowest median income. Those who make less money are being affected by gas prices in a number of ways. One North Carolina news source referred recently to a man who has begun working 12-hour work days to pay for the gas needed to commute to his job.

3. West Virginia

Median income: $40,490 (5th lowest)

Price of regular gasoline: $3.88 (12th highest)

Unemployment: 9.4% (16th highest)

Below poverty line: 22.07% (5th highest)

West Virginia has the fifth-lowest median income in the country, as well as the fifth-greatest percentage of its population below the poverty line. Wayne Waldeck, the chief executive officer of pizzeria operator Wal-bon Corp., said he spends “thousands of dollars a week on gasoline for [his] delivery trucks,” according to the Parkersburg News and Sentinel. The bite, he added, is getting harder. Across North Carolina, delivery charges are being increased, passing fuel-cost rises on to consumers.

2. Indiana

Median income: $44,305 (12th lowest)

Price of regular gasoline: $4.04 (4th highest)

Unemployment: 8.8% (24th highest)

Below poverty line: 17.57% (20th highest)

‘[Y]ou’re going to notice people cutting back on driving, sharing rides, shopping aggressively for gas prices and doing everything they can to save themselves a little money.’
Greg Seiter, AAA Hoosier Motor Club

With gas prices topping an average of $4 per gallon for the first time since 2008, Indiana currently has the fourth-highest gas prices in the country. One way in which people have reacted is by staging a one-day boycott. Greg Seiter of AAA Hoosier Motor Club told a local newspaper: “If past experiences are any indication, the $4 mark tends to move people in ways that other price levels don’t. … [Y]ou’re going to notice people cutting back on driving, sharing rides, shopping aggressively for gas prices and doing everything they can to save themselves a little money.”

1. Alabama

Median income: $39,980 (3rd lowest)

Price of regular gasoline: $4.17 (3rd highest)

Unemployment: 9.3% (18th highest)

Below poverty line: 21.77% (6th highest)

Alabama has the third-highest gas prices in the country and the third-lowest median income. Just under 22% of the state’s population lives below the poverty line — the sixth-greatest proportion among all states. Gulf Coast resident shave complained of these prices pinching their wallets just a year after last year’s BP PLC
BP, +1.02%
oil spill disrupted their lives. Tourist spots that were effectively shuttered by the Deepwater Horizon disaster will now have to handle a drop in tourist traffic due to high gasoline prices.

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